LEGISLATIVE ADVOCACY BY NONPROFIT ORGANIZATIONS
Sean Delany
Executive Director
Lawyers Alliance for New York
Philanthropy New York
July 14, 2015
I.
Framing the Issue: Campaign-Related Activity and Lobbying
For over forty years, federal tax law has restricted participation in electioneering
and legislative activity by nonprofit organizations. Premised upon a congressional
antipathy to use of the subsidy of tax exemption for partisan ends, the Internal
Revenue Code both prohibits activities and expenditures by 501(c)(3) organizations
which explicitly or implicitly endorse or oppose political candidates, and limits the
extent to which those groups may directly or indirectly attempt to influence
legislation. Other nonprofit organizations, such as social welfare and political
organizations, are accorded more latitude by the tax code in promoting or opposing
legislation and even participating in the electoral process.
Nonprofit tax-exempt organizations are anxious to ensure that their voices will be
heard on the issues that are important to their missions without jeopardizing their
tax-exempt status or get into other legal trouble. Nonprofits' activities could present
problems if the organization exceeds the limits on legislative advocacy that are
permitted for nonprofit tax-exempt organizations.
Legislative advocacy is also regulated by registration and disclosure laws at the
federal, state, and municipal levels in New York. Those statutes do not limit the
amount of lobbying activity that can be conducted, but do require detailed reporting
of that activity.
II. The Internal Revenue Code
A.
Rules Restricting Lobbying Activities by 501(c)(3) Organizations
A public charity may be recognized as exempt from taxation under §501(c)(3)
of the Internal Revenue Code if "no substantial part" of its activities consists
of carrying on propaganda or otherwise attempting to influence legislation.
First added to the Code in 1934 without the benefit of Congressional hearings,
the impetus for the restriction was blurred from the outset: the legislative
history quotes one Senator on the amendment's intent to limit "partisan
politics" and to deny deductibility of a contribution as a charitable gift "if it is
a selfish one made to advance the personal interests of the giver of the
money."1 After much subsequent legislative tinkering, the requirement today
serves to restrict – but not to prohibit – certain kinds of legislative activity by
exempt public charities.
1.
2.
"Legislation" defined for IRS purposes:
a.
Legislation includes actions by Congress, state legislative bodies,
local legislative authorities, as well as public votes in regard to
referenda, ballot initiatives, and constitutional amendments.2
b.
Legislation includes confirmation of a federal judicial nominee by
the U.S. Senate, as "resolutions" or "similar items."3
c.
Legislation includes proposals for the enactment or amendment of
international law.4
d.
Legislation excludes administrative rulemaking or other action,
executive action not subject to federal or state legislative approval,
local actions by special bodies such as zoning or school boards.
"Lobbying" defined for IRS purposes:
a.
"Direct lobbying" is an attempt to influence legislation by
communication with the legislator or legislative body regarding
specific legislation or proposed legislation.
i. Direct lobbying includes communications with government
employees such as legislative aides as well as contacts with
members of the legislative body.5
ii. With regard to ballot initiatives and public referenda,
communications with members of the general public in the
jurisdiction where the vote will occur are considered direct
lobbying.6 Note, therefore, that a specific encouragement to
vote or advocate for or against such an initiative (a "call to
action") is not a necessary element.
iii. Direct lobbying includes only communications which refer to
specific legislation or proposed legislation.7
iv. The communications must express a view on the legislation or
proposed legislation; neutral references are excluded.8
2
b.
"Grass roots" lobbying is an attempt to influence legislation by
encouraging others to take action with regard to that legislation.
i. Grass roots lobbying includes only communications which
refer to specific legislation or proposed legislation.9
ii. The communication must express a view on the legislation.10
iii. The communication must encourage the recipient to take action
with regard to the legislation, such as an explicit appeal to
contact legislators or an implicit inducement by identifying a
specific legislator's position (other than a neutral reference to a
legislator as a sponsor).11 A "call to action" may be inferred
from communications which provide the names and addresses
of legislators or provide petitions, postcards, or telephone
numbers to enable the recipient to advocate to the legislators or
their staffs.
c.
The exceptions: what is not lobbying according to the IRS
i. Communications which are nonpartisan analysis, study, or
research are not lobbying.12 To qualify for this exception, a
communication must provide a sufficiently full and fair
exposition of the facts to enable a member of the general public
to form an independent opinion, and be made available to at
least a segment of the general public or to a nonpartisan crosssection of the legislative body.
ii. Providing technical advice or assistance to a governmental
body, in response to a written request by that body or
subdivision thereof, is not lobbying.13 Communications in
response to a request from a single legislator on his or her own
behalf do not qualify for this exception, and the information
must be made available to all members of the legislative body.
iii. Appearances before, or communications to, a legislative body
regarding legislation which might affect the existence of the
exempt organization or its affiliates, its powers, duties, exempt
status, or the deductibility of contributions to the organization,
are not lobbying.14 This "self-defense" exception applies only
to direct lobbying and does not apply to communications that
would be considered grass roots lobbying.
3
iv. Communications with government officials and employees, the
purpose of which is not to influence legislation, are not
lobbying.15
v. Communications which are "primarily" between an exempt
organization and its bona fide members with regard to
legislation of interest to them, so long as members are not
directly encouraged to either influence legislation themselves
or urge nonmembers to do so.16
vi. Communications which are "examinations and discussions of
broad social, economic, and similar problems," if no call to
action is included, are not lobbying.17
d.
Exceptions to the Exceptions
i. Subsequent Use Rule. If a nonprofit subsequently uses
nonlobbying communications or research materials in a grass roots
campaign, it must treat the original communications and research
materials as grass roots lobbying communications. All of the
original and subsequent expenses of preparing and distributing the
material must be treated as grass roots expenditures. Materials
would become grass roots communications when they are
subsequently distributed with a direct encouragement to action, or
“call to action.”18
(1) The rule applies only to expenditures paid less than six
months before the first subsequent “grass roots lobbying” use
of the materials.
(2) The rule only turns nonlobbying expenditures into grass
roots lobbying expenditures; not direct lobbying expenditures.
ii. Mass Media Communications. Mass media communications
often do not constitute grass roots communications because they
do not (i) refer to specific legislation; (ii) reflect a view on such
legislation; and (iii) encourage the recipient to take action with
respect to such legislation.19
However, under special
circumstances, such communications are deemed to be grass roots
lobbying:
(1) If, within two weeks before a vote of a legislative body, or
a committee (but not a subcommittee), an organization pays
4
for a mass media advertisement on a highly publicized piece
of legislation, the paid advertisement will be treated as a grass
roots lobbying communication, if
(A) the paid advertisement reflects a view on the general
subject of the legislation; and
(B) either refers to the highly publicized legislation OR
encourages the public to communicate with legislators on the
general subject of such legislation.20
(2) The presumption can be rebutted by demonstrating that the
paid advertisement is a type of communication regularly made
by the organization in the mass media without regard to the
timing of the legislation or that the timing was unrelated to the
upcoming legislative action.21
(3) “Mass media” means television, radio, billboards and
general circulation newspapers. 22
(4) “Paid advertisement,” where the election charity is itself a
mass media publisher or broadcaster, refers to all portions of
the organization’s mass media publications or broadcasts,
except for specific portions paid for by another person.23
(5)
“Highly publicized” means frequent coverage on
television and radio, and in general circulation newspapers,
during the two weeks preceding the vote by the legislative
body or committee.24
2.
Measuring the limitations on lobbying activity
a.
"Substantial part" test
i. Whether a "substantial part" of an organization’s activities are
lobbying is a factual determination, and inevitably a subjective
question.25
ii. The analysis to determine what is "substantial" is not
exclusively quantitative, but requires an examination of the
activity in the context of the organization's activities as a
whole.26
b.
Lobbying "expenditures" test – the 501(h) election
5
i. Enacted in 1976, the expenditures test is a mechanical test
which provides a safe harbor to eliminate the uncertainties
inherent in the substantial part test while continuing to prohibit
legislative activity as a primary focus of charitable exempt
organizations. 27
ii. Nontaxable levels of total lobbying expenditures (direct plus
grass roots) are: 20% of a charity's first $500,000 in "exempt
purpose expenditures," plus 15% of the next $500,000, 10% of
the next $500,000, and 5% of any remaining "exempt purpose
expenditures", up to a maximum of $1 million to be spent on
lobbying. Within those overall lobbying limits, the grass roots
lobbying limit is 25% of the nontaxable amount.28
iii. “Exempt purpose expenditures” do not include amounts spent
on other than program activity by the charity, do not include
expenses of a separate fundraising unit, do not include amounts
paid or incurred (or taxes imposed and paid) in connection with
a trade or business unrelated to the charity's purpose, and do
not include amounts transferred to members of an affiliate in
order to artificially inflate its exempt purpose expenditures (in
relation to the affiliate's lobbying expenditures).29
iv. The election is not available to private foundations, churches,
or organizations formed to support labor unions, trade
associations, or social welfare organizations.30
v. The Internal Revenue Service has attempted to allay any
concerns about increased audit exposure from making the
501(h) election. By so electing, a charity "can take advantage
of specific, narrow definitions of lobbying and clear, dollarbased safe harbors that generally permit significantly more
lobbying than the 'no substantial part' rule."31
3.
To elect or not elect under §501(h)
a.
Effect of election
i. Direct or grass roots lobbying within the statutory limits will
not result in either taxes or jeopardy to exempt status.
ii. Election is a one time event, retroactive to beginning of the tax
year designated in the election filing, and continuing in all
6
subsequent years unless and until revoked by exempt
organization.
iii. Revocation is effective only prospectively, beginning with the
next tax year after revocation filing.
b.
Mechanics of making the election
i. Make the election on form 5768 (One page, no fee).
ii. Make a revocation also on form 5768 (Again, no fee).
ii. Report expenditures for lobbying activity in Part VI of
Schedule A of Form 990; no additional reporting to the IRS is
required.
4. Sanctions
a.
Revocation of exempt status
i. Exempt charities which have not made a §501(h) election are
subject to revocation of exempt status if a substantial part of
their activities are lobbying. They may be designated "action
organizations" and exempt status may be denied or revoked.32
A §501(c)(3) organization which loses its exemption by reason
of substantial lobbying may not qualify for exemption as a
"social welfare organization" under §501(c)(4).33
ii. Electing charities which exceed either the direct lobbying or
grass roots lobbying §501(h) nontaxable limits by 150% or
more over on average over a four year period (the "lobbying
ceiling") are subject to revocation of exempt status.34 They are
not then able to convert to a tax-exempt §501(c)(4)
organization.35
b.
Taxes
i. Exempt charities which have elected under §501(h) but who
have exceeded its nontaxable lobbying limits are subject to a
25% tax on the amounts of lobbying expenditures in excess of
those limits.36
7
ii. Nonelecting charities whose exempt status has been revoked by
reason of substantial lobbying are also subject to a tax in the
amount of all lobbying expenditures during that year, and an
additional tax of 5% of that amount may be imposed on the
responsible organization manager, "knowing that such
expenditures are likely to result" in the revocation of exempt
status, unless the manager's actions were not willful and were
due to reasonable cause.37
B.
Lobbying by Private Foundations
1
Lobbying is prohibited
a.
Any amount paid or incurred by a private foundation to carry on
propaganda, or otherwise attempt to influence legislation is
considered a taxable expenditure.38
b.
The tax on the private foundation will be 10% of the lobbying
expenditure paid or incurred.39
c.
The prohibition includes attempts to influence legislation either
through communications with government officials or through
attempts to affect the opinion of the general public with regard to a
particular item of pending or proposed legislation.40
2. Exceptions
a.
Communications with government officials regarding a program
jointly funded by the government and the private foundation are
not lobbying.41
b.
Nonpartisan analysis, study or research that is made generally
available to the public or to government officials is not lobbying.42
c.
Technical assistance or advice provided to a governmental body or
committee, in response to a written request from a representative
of that body or committee, is not lobbying.43
d.
Communications with legislative bodies with regard to issues that
may affect the private foundation's existence, its powers and
duties, its tax exempt status, or the deductibility of donations to the
private foundation are not lobbying.44
8
e.
Examinations and discussions of broad social, economic and
similar issues, are not lobbying, so long as the discussions do not
take a view of particular legislation and do not directly encourage
the recipients to advocate for or against the legislation.45
3. Grantmaking Considerations
C.
a.
If a private foundation designates a grant to a public charity as
being for lobbying purposes, it will also be treated as a lobbying
expenditure by the private foundation; "earmarking" is taxable.46
b.
Making a general support grant that is not earmarked to a public
charity that engages in lobbying will not create a presumption that
the grant will be used for lobbying, and the private foundation does
not have a duty to make prior inquiry as to its use.47
c.
A private foundation grant to a public charity for a special project
that has a lobbying component will not be deemed a lobbying
expenditure by the private foundation so long as the amount of the
grants from any one foundation for that project do not exceed the
nonlobbying portion of the budget prepared for the project by the
grantee public charity.48
Lobbying by Other Tax-Exempt Organizations
1.
501(c)(4) civic leagues and social welfare organizations
a.
Civic leagues and social welfare organizations may engage in
lobbying and qualify for exempt status under §501(c)(4) even if :
i. a substantial part of their activities consist of lobbying, or
ii. their primary activity is lobbying, if their main objective may
be achieved only by legislative action (as an "action
organization").49
b.
2.
However, a §501(c)(3) organization which loses its exemption by
reason of "substantial lobbying" or lobbying in excess of the
elective lobbying ceiling may not qualify for §501(c)(4) status.50
501(c)(5) labor unions
a.
Labor organizations may engage in lobbying if within their stated
purposes.
9
b.
3.
Members' dues from payroll deductions may be limited if grass
roots lobbying activity is substantial.51
501(c)(6) trade associations and business organizations
a.
The IRS has recognized legislative lobbying as a valid function of
nonprofit trade associations and business organizations.52
b.
However, business expense deduction rules operate to limit this
activity. Although membership dues or contributions to a
501(c)(6) organization are generally deductible as a business
expense, certain expenditures are not deductible, whether incurred
by the individual or by the trade association, paid for by dues: e.g.,
expenditures for direct legislative lobbying at the federal and state
(but not local) level and grass roots communications – including
communications with members (who are considered a segment of
the general public for this purpose), communications with certain
Executive branch officials and political campaign activity are not
deductible.53
III. Lobbying Registration and Disclosure Laws
A.
Federal Law
1.
The Federal Lobbying Disclosure Act54
a.
The Lobbying Disclosure Act of 1995 requires lobbyists (including
nonprofit organizations) to register and file semi-annual financial
disclosure reports with the Secretary of the Senate and the Clerk of
the House of Representatives if
i. the lobbying individual has made at least two legislative
contacts and has spent at least 20% of his or her time on
lobbying activity in a quarterly period; and
ii. the organization employing the lobbying individual spent at
least $12,500 on lobbying during that quarterly period.
b.
The Act does not cover state, local, or grass roots lobbying, but
does include contacts with federal legislators and certain “covered”
federal executive officials.55
B. New York State Law
10
1.
The New York State Lobbying Act56
a.
Amended March 26, 2007 by the Public Employees Ethics Reform
Act of 2007. As of January 2008, all amendments are now
effective.
b. The New York State Lobbying Act defines “lobbying” activity as
“any attempt” to influence:
i. The passage or defeat of any legislation by either house of the
state legislature; or
ii. The approval or disapproval of any legislation by the governor;
or
iii. The adoption or rejection of any rule or regulation having the
force and effect of law or the outcome of any rate making
proceeding by any state agency; or
iv. The passage or defeat of any local law, ordinance or regulation
by any municipality or subdivision thereof; or
v. The adoption or rejection of any rule or regulation having the
force and effect of a local law, ordinance or regulation or any
rate making proceeding by municipality or subdivision thereof.
vi. Any determination by a public official or by an officer or
employee of the unified court system, or by a person or entity
working in cooperation with a or by a person or entity working
in cooperation with a public official or unified court system
related to a governmental procurement.
vi. The adoption, issuance, rescission, modification of any terms
or rejection of any gubernatorial executive order or an
executive order issued by the chief executive officer of a
municipality (e.g., NYC’s Mayor).
vii. Approval, disapproval, implementation of any State agreement
or action relating to Class II gaming.
d.
“Lobbying” activity includes administrative as well as legislative
advocacy.
e.
Procurement Lobbying—
11
i. The following are excluded from the definition of “lobbying”:

responding to an RFP or IVB

formal contacts with designated procurement officials
permitted under procurement rules, such as agency
organized conferences, questions and responses
submitted through formal methods (i.e., all Q&A is
disseminated to all offerors who expressed an interest
in the RFP) and certain ordinary course
communications to negotiate the terms of a contract
once awarded—no contact with a local legislative
body that must approve the contract.
ii. According to the Commission, lobbying begins when the
agency has made a “determination of need.” Ask the agency
whether there has been a determination of need.
iii. “Restricted Period” under the New York State Lobbying Act:

During the restricted period, registered lobbyists and
clients are prohibited from engaging in lobbying
activities relating to procurement contracts with certain
agencies and governmental entities.

Applies only to procurement contracts with state
agencies, the unified court system, industrial
development agencies and public benefit corporations.
Notably, the restricted period does not apply to
procurement contracts with municipal agencies, such as
NYC Department of Youth and Community
Development, NYC Department of Education and other
New York City agencies.

The “restricted period” begins when the earliest written
notice or advertisement of an RFP or any other method
of soliciting a response from an offeror that are
intended to result in a procurement contract is issued,
and ending with final contract award and approval.

Restricted period does not apply to any contract
between a New York State executive agency and a
501(c)(3) organization, any other domestic corporation
12
subject to the Not for Profit Corporation Law, or a
charitable organization registered with the NY
Secretary of State.
iv. Procurement contracts are those with estimated annual
expenditure greater than $15,000; grants are not considered
procurement contracts and neither are contracts with state
agencies pursuant to Article XI-B of the State Finance Law.
f.
Member Items/Discretionary Funds: Nonprofits should treat
requests for member item funding from state legislators as
lobbying communications. Although it is unclear how requests for
discretionary funding from city legislators would be treated,
nonprofits are prudent to treat requests for amounts greater than
$15K as lobbying communications.
g.
The act applies to grass roots (or “indirect”) lobbying, as well as
direct lobbying; it is not clear whether a “call to action” is
required.57 The New York Civil Liberties Union has challenged in
court attempts by the Commission on Public Integrity to apply the
Act to a public rally and a billboard that did not contain a “call to
action.” No court has ruled on this point of law, but the
Commission has issued an advisory opinion indicating that a “call
to action” is required for grass roots lobbying to occur.
h.
The Act applies to local lobbying as well as State government
lobbying. Therefore an organization must report local lobbying in
reports filed with the Commission.
i.
The Act requires registration with the New York State
Commission on Public Authority on a biennial and periodic
financial disclosure reporting.
k.
The Act applies to lobbyists and employers of lobbyists who
receive or expend, as applicable, more than $5000 in reportable
compensation and/or expenses for lobbying.
l.
Nonprofit organizations, even when acting solely on their own
behalves and not paid by outside sources, are required to register
as lobbyists and report.58 Unpaid volunteers receiving only
reimbursement for travel and lodging expenses, however, are not
required to register because those reimbursements are not
"reportable expenses."59
13
m.
Lobbyists are required to file bi-monthly reports; lobbying clients
continue to file semi-annual reports.
n.
Penalties--The Commission on Public Integrity may impose civil
penalties for “knowing and willful” violations of the Act, and may
impose late filing penalties of $10 per day for first time filers and
late filing penalties of $25 per day for others.
i. The Commission has to give notice to newly registered
lobbyists and clients that it will assess a penalty for a first-time
“knowing and willful” violation of the Act and give the
lobbyist or client 15 days to submit the form.
ii. Prior to imposing a civil penalty for a knowing and willful
violation the Commission must consider as a mitigating factor
that the lobbyist or client has not previously been required to
register and to consider as an aggravating factor the fact that
the lobbyist or client has had fines or penalties in the past. The
Commission must also consider the proportionality of the
penalty to the amount the lobbyist or client expends or
receives.
iii. Knowingly and willfully engaging in prohibited procurement
lobbying during the Restricted Period will subject a lobbyist or
client to a fine of up to $10,000 and if the Commission finds
two violations of the ban on procurement lobbying within a
four-year period, the Commission may increase the penalty to
$25,000 and may ban the lobbyist or client from lobbying on
procurement contracts for a period of four years. Lobbying
during the four-year prohibition can result in penalties up to
$50,000.
iv. The legislation clarifies that any assessment of a penalty under
these new provisions will only be made after the Commission
sends a notice by certified mail of the intent to assess a penalty,
the basis for the penalty and offers the party an opportunity to
appear, present evidence and be heard at a hearing on the
merits.
o.
The New York State Lobbying Act contains an exception for
requests for information from government bodies, but responding
to those requests will nevertheless be defined as lobbying if:
14
i. The informant volunteered more information than was sought
in the request;
ii. The informant provided requested information in a manner that
clearly attempted to influence the passage or defeat of
legislation, rules, or regulations;
iii. The informant instigated the request from the government
official; or
iv. The informant “otherwise engaged in lobbying” on the subject
matter in question.60
C.
New York City Law
1.
The New York City Lobbying Act61
a.
The City lobbying laws and campaign finance laws were amended
on June 13, 2006, when Mayor Bloomberg signed three bills into
law. The key amendments were effective as of December 10,
2006; amendments to the New York City campaign finance law
were effective on June 13, 2006. These amendments raised furor
over privacy concerns and in April, 2007, amendments were
enacted to address the privacy concerns. In 2013, the law was
further amended in several respects, including setting criteria for
waiving late fees and creating an amnesty program for nonfilers.
b.
The New York City Act defines “lobbying” activity as “any
attempt” to influence:
i. The passage or defeat of any local law or resolution by the city
council;
ii. The approval or disapproval of any local law or resolution by
the mayor;
iii. Any determination made by an elected city official or an
officer or employee of the city with respect to the procurement
of goods, services, or construction;
15
iv. Zoning or land use determinations by the mayor, city council,
city planning commission, a borough president, a borough
board or community board;
v. Determinations as to the disposition or lease of real property by
the city or with respect to a franchise concession or revocable
consent;
vi. The adoption, amendment or rejection of any agency rule
having the force of law;
vii. The outcome of any ratemaking proceeding before a city
agency; or
viii. Any determination of a board or commission.
c.
The New York City Act applies to both individual lobbyists and
their employers. Nonprofits must register as lobbyists and report.
Note: Registration and reporting MUST be done on-line now.
d.
The compensation/expenditure threshold trigger is $2000 in a
calendar year. This may increase by rule issued by the Clerk’s
Office.
e.
Registration and periodic and annual financial disclosure reporting
with the Clerk of the City of New York.
f.
Features of the 2007 amendments include:
i. Enhances and broadens the enforcement authority of the NYC
Clerk’s Office, which currently administers and does little to
enforce the City’s lobbying laws. The Clerk’s office is
mandated to conduct random audits, can refer matters for
investigation by Department of Investigation. The Clerk’s
Office was given funding to support this more expansive
enforcement role.
ii. Requires greater disclosure on lobbyist statements of
registration. The December 2006 amendments required reg.
statements to list the names, addresses and phone numbers of
(a) the registered lobbyist, (b) any employee of officer “who
engages in any lobbying activity” (emphasis added), (c)
employees and officers employed in an organization’s division
16
that engages in lobbying activities and (d) the spouse or
domestic partner and unemancipated children of the foregoing.

Problem: registration statements are publicly available.
Fortunately, in April, 2007, privacy concerns prevailed
and City Council amended the law to eliminate the
requirement to include the names of unemancipated
children on statements of registration, unless a
campaign contribution is made in the name of the child,
and to require the City Clerk to keep confidential all
home address information provided on registration
statements and all names, home and business addresses
of spouses, domestic partners and unemancipated
children.
iii. Requires greater disclosure as to subjects being lobbied—now
have to include local law numbers, procurement contracts, etc.
on which the lobbyist expects to lobbied. The Clerk’s Office,
by rule, has directed that the reporting periods will conform to
those used by the Commission beginning January, 2008.
iv. Doubles civil penalties amounts so that penalties can reach
$30,000. Permits the Clerk’s Office to assess penalties for late
filed reports that will accrue daily like the late filing penalties
under the state law.
v. Prohibits persons required to be listed on statements of
registration from giving or offering a gift to any public servant.

The Conflicts of Interest Board has adopted rules
relating to the gift ban, to define prohibited and
permitted gifts, including de minimis gifts, such as
“pens and mugs, gifts that public servants may accept
as gifts to the city and gifts from family members and
close personal friends on family or social occasions.”

Included among permissible exceptions to the gift ban
rule is giving complimentary tickets to elected or other
city officials.
vi. Amends the Campaign Financing law by preventing the
matching of contributions by lobbyists or other persons
required to be included in a statement of registration to
17
candidates participating in the city’s optional public financing
program.
vii. Requires registered lobbyists, including not-for-profit
organizations, to file periodic reports called fundraising and/or
political consulting reports, in which the lobbyist must report
the political fundraising and paid political consulting of the
lobbyist, any person listed on its registration statement and
their unemancipated children.

The City Clerk’s office interprets this provision of the
law to require nonprofits to ask the individuals listed on
their registration statements about the political
fundraising and paid political consulting in which they
engage, even though it is conducted in their private
lives during off-work hours.

The registered organization lobbyist has to report
details about this activity, including for whom funds
were raised, and report it periodically along with
lobbyist reports and then cumulatively in an annual
report due on January 15 of each year, for the previous
year.
g. Features of the 2013 amendments include:
i. Criteria for requesting advisory opinions;
ii. Procedure for enrolling in e-Lobbyist;
iii. Defines the roles of principal officer, designee and
compliance officer;
iv. Provides requirements for retainers and authorization
letters;
v. Provides a process to deactivate statements of
registration;
vi. Indicates when filing extensions may be obtained;
18
vii. Sets forth the procedures for obtaining a waiver of late
filing penalties;
viii. Establishes Lobbying Bureau enforcement procedures;
and
ix. Creates an amnesty program which sets forth eligibility
criteria for lobbyists and clients who have not
previously complied with the Lobbying Law.
1
78 Cong. Rec. 5861 (1934). The language of the amendment was modified to delete the reference to
"partisan politics" prior to its enactment, but the language defining the prohibition otherwise survives
today in its original form.
2
IIRC§ 4911(e)(2); Treas. Reg. §53.4945-2(d)(2)(iii)(defining the term for purposes of the "expenditure"
test); Treas. reg. §1.501(c)(3) - 1(c)(3)(ii) (defining the term for purposes of the "substantial part" test).
3
IRC §4911(e)(2); Treas. Reg. §56.4911-2(b)(4)(ii)(B).
4
See Rev. Rul. 73-440, 1973-2 C.B. 177.
5
Treas. Reg. §56.4911-2(b)(1).
6
Treas. Reg. §56.4911-2)b)(1)(iii).
7
Treas. Reg. §56.4911-2(b)(1)(ii). Note that not every communication referring to and discussing
legislation will be lobbying, given the exception for nonpartisan analysis, study and research.
8
Treas. Reg. §56.4911-2(b)(1)(ii).
9
Id.
10
Id.
11
The IRS has indicated that it intends, by this approach, to draw a distinction between lobbying that is
limited by §501(c)(3) and advocacy communications between exempt organizations and the public that
do not attempt to influence legislation. "This is part of the Service's attempt to maintain a careful balance
between the statutory limits on electing public charities' lobbying expenditures and the desire of those
organizations to involve themselves in the public policy making process to the greatest extent consistent
with those statutory limits." 55 Fed. Reg. 35580 (Aug. 31, 1990). The "call to action" requirement is
eliminated in the special case of paid mass media advertisements on the subject of pending legislation
that are broadcast or published within two weeks prior to the legislative action. Those communications
will be considered grass roots lobbying if the advertisement reflects a view on the subject of the
legislation and either refers to the legislation or encourages the public to contact legislative
representatives about the general subject of the legislation. Treas. Reg. §56.4911-2(b)(5).
12
IRC §4911(d)(2)(A); Treas. Reg. §56.4911-2(c)(1). However, the expense of preparing materials
subsequently used in lobbying activities will not be counted if the primary purpose of the materials was
not for lobbying or the expenditures were paid more than six months before the subsequent use. In those
instances where the subsequent lobbying use is by an independent organization, there must also be "clear
and convincing evidence" of collusion between the two groups to prepare and disseminate the materials
for lobbying purposes or the expenditures incurred in preparation will not be counted as lobbying
expenditures. Treas. Reg. §56.4911-2(b)(2)(v).
13
IRC §4911(d)(2)(B); Treas. Reg. §56.4911-2(c)(3).
14
IRC §4911(d)(2)(C); Treas. Reg. §56.4911-2(c)(4).
15
IRC §4911(d)(2)(E).
19
16
IRC §4911(d)(2)(D). The communication would be considered direct lobbying or grass roots lobbying
depending upon which of the latter two requirements were not satisfied. Treas. Reg. §56.4911(c) and (d).
Generally, an individual is considered to be a bona fide member if he or she contributes more than a
nominal amount of time or money to the organization, and communications "primarily" to those members
would include communications of which at least 50% are directed to members. See Treas. Reg. §56.49115(f)(1)-(4).
17
Treas. Reg. §56.4911-2(c)(2).
18
Treas. Reg. §56.4911-2((b)(2)(v).
19
Treas. Reg. §56.2911-2(b)(5).
20
Treas. Reg. §56.2911-2(b)(5)(ii).
21
See id.
22
Treas. Reg. §56.2911-2(b)(5)(iii)(A).
23
Treas. Reg. §56.2911-2(b)(5)(iii)(B).
24
Treas. Reg. §56.2911-2(b)(5)(iii)(C).
25 In considering amendments adding the expenditure test, one Congressional Committee reported,
"Many believe that the standards as to the permissible level of activities under present law are too vague
and thereby tend to encourage subjective and selective enforcement." S. Rep. No. 94-938 (Part 2), 94th
Cong., 2d Sess. (1976), at 80.
26
Christian Echoes National Ministry, Inc. v. United States, 470 F.2d 849, 855 (10th Cir. 1972); cert.
denied 414 U.S. 864 (1973); but see Seasongood v. Commissioner, 227 F.2d 907, 912 (6th Cir.
1955)(Five per cent of an organization's "time and effort" devoted to lobbying did not constitute a
substantial part of its activities).
27
IRC §501(h).
28
IRC § 4911(c)(2) and (3); Treas. Reg. 56.4911-1(c)(1) and (2).
29
IRC §4911 (e)(1)(C); Treas. Reg. §56.4911-4(c).
30
IRC §501(h)(4) and (5); Treas. Reg. §1.501(h)-2(b),(e).
31
"General Interest Letter" dated June 26, 2000 from the Internal Revenue Service to Charity Lobbying
in the Public Interest, a project of Independent Sector.
32
Treas. Reg. §1.501(c)(3)-1(c)(3)(ii) and (iv).
33
IRC §504(a).
34
IRC §501(h)(1) and (2); Treas Reg. §1.501(h)-3(b).
35
IRC §504; Treas. Reg. §1.504-1 and 2.
36
IRC §4911(a); Treas. Reg. §§56.4911-1(a), 1.501(h)-1(a)(3).
37
IRC §4912. The burden of proof is on the IRS in attempting to impose the tax on the manager, and
may not be inferred from the imposition of the tax upon the organization. See H. Rep. 100-495, 100th
Cong., 1st Sess.at 1024 (1987).
38
IRC §4945(d)(1). Thus, there is no "substantiality" requirement for private foundations.
39
Id.
40
IRC §4945(e).
41
Treas. Reg. §53.4945-2(a)(3).
42
IRC §4945(e).
43
IRC §4945(e)(2).
44
IRC §4945(e). Private foundations are also authorized to propose legislation, without taxation,
concerning such "self-defense" issues. Treas. Reg. 53.4945-2(d)(3)(i).
45
Treas. Reg. §53.4945-2(d)(4).
46
Treas. Reg. §53.4945-2(a)(6)(i).
47
Id.
48
Treas. Reg. §53.4945-2(a)(6)(ii).
49
See Treas. Reg. §1.501(c)(4)-1(b)(ii).
50
IRC §504(a).
20
51
See IRC § 162(e).
Rev. Rul. 61-177, 1961-2C.B. 117.
53
IRC §162(e)(2)(B); Rev. Rul. 78-113, 1978-1 C.B. 43; Rev. Rul. 78-114, 1978-1C.B. 44.
54
104 P.L. 65 §4(a)(1995).
55
However, those activities are also regulated at the federal level by Revised Circular No. A-122 from
the Office of Management and Budget. See OMB Revised Circular No. A-122 (Transmittal
Memorandum No. 4, May 1997).
56
Ch. 1040 of the Laws of 1981, as amended by Ch. 946 of the Laws of 1983 and Ch. 937 of the Laws of
1997; Legislative Law Ch. 32 of the Consolidated Laws of New York, Article 1, §§1-15.
57
NY State Temporary Commission on Lobbying, Op. 21 (1979); Op. 27 (1979); Op. 36 (1982); Op. 39
(1997); Op. 43 (2000); Op. 44 (2000); See also Hip Hop Summit Action Network, et al v. NY Temporary
State Commission on Lobbying, et al (03 CIV 5553, SDNY)(pending litigation challenging the
application of the lobbying act to public rallies on First Amendment grounds).
58
Police Conference of New York, Inc. v. Kreutzer, 91 A.D. 2d 735 (3d. Dept. 1982). Note that the Act
does not contain a "self-defense" exception, so even inquiries about an organization's own funding would
constitute lobbying.
59
NY State Temporary Commission on Lobbying, Op. 10 (1978).
60
NY State Temporary Commission on Lobbying, Op. 22 (1979).
61
NYC Admin. Code Title 3, §3-211 et seq.
52
21